Zillow recently updated the Zestimate algorithm to incorporate new enhancements and even more data. To calculate a Zestimate, Zillow uses a sophisticated neural network-based model that incorporates data from county and tax assessor records and direct feeds from hundreds of multiple listing services and brokerages.
Neural networks are artificial intelligence systems that imitate how the human brain works. They are able to map hundreds of millions of data points efficiently, drawing connections between inputs and using the relationships formed to produce or predict an output. In the case of the Zestimate algorithm, the neural network model correlates home facts, location, housing market trends and home values.
The Zestimate also incorporates:
Home characteristics, including square footage, location or the number of bathrooms
On-market data such as listing price, description, comparable homes in the area and days on the market
Off-market data — tax assessments, prior sales and other publicly available records
Market trends, including seasonal changes in demand
Zillow publishes Zestimate home valuations for over 104 million homes across the country, and uses state of the art statistical and machine learning models that can examine hundreds of data points for each individual home. Read more